Brattle: US storage market could reach 50 GW if costs keep declining

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Dive Brief:

New analysis from The Brattle Group concludes the United States market for energy storage could reach 50,000 MW, as long as battery prices to continue their decline and state and federal policies encourage the resource.

A recent decision by federal regulators is expected to boost storage growth. The Federal Energy Regulatory Commission directed wholesale market operators to develop rules for energy storage to participate in energy, capacity and ancillary services markets in ways that acknowledge its operational characteristics.

FERC is continuing to develop rules that level the playing field for traditional generators and grid edge technologies. The commission has called for an April technical conference to discuss market rules for distributed energy resource aggregations.

Dive Insight:

FERC Order 841 could be a landmark decision for the storage industry but Brattle's report is a reminder that economics and policy will also need to be favorable in order for storage to reach its full potential.

Brattle estimates at least half of the total value that storage can provide would be achievable in wholesale electricity markets, with the balance at the transmission and distribution and customer level. But federal regulators' market rules will need to be matched at the state level.

"Combining the FERC policy with state-level initiatives that enable storage to capture all available value streams will likely increase its market potential by three to five times compared to a future that limits storage to capturing only wholesale market benefits," Brattle concluded.

But many questions remain in the market, including whether battery costs will continue their decline and to what extent can storage reduce the inefficiencies of cycling traditional generating plants.

Judy Chang, a Brattle principal and co-author of the study, said that already there are "important, but narrow, applications" where storage is already cost effective today. "We are not quite there yet, but as costs decline further, storage will be transformative for the power industry."

In directing wholesale markets to develop rules, FERC laid out several requirements aimed at maintaining a level playing field. Rules must ensure that a storage resource can provide all the services it is technically capable of providing; ensure storage can be dispatched and can set market clearing prices as both a buyer and a seller; and establish a minimum size for participation in RTO/ISO markets that does not exceed 100 kW.